Tax Breaks Available for Hurricane Victims
President Trump recently issued disaster declarations for several counties in Texas, as well as counties in Florida and the U.S. Virgin Islands, impacted by recent hurricanes Harvey and Irma. While this makes residents of these areas eligible for federal financial assistance, it also opens the door for potential tax savings.
If you or someone you know has experienced a significant financial loss due to the recent hurricanes (known as a “casualty loss” in tax lingo), this loss is potentially deductible. The amount of the loss can be determined in one of two ways:
- Add up the total amount of expenses that it takes to restore your property to its original condition, minus whatever insurance reimbursements were received. This is the deductible loss.
- Obtain a broker opinion or appraisal on the value of your property immediately before and immediately after the casualty. The reduction in value resulting from the casualty, less any reimbursements you receive, is the deductible loss.
Business losses are given somewhat more generous treatment than personal losses, but personal losses can still create a substantial tax benefit. Personal losses are usually limited to only that amount of the loss which exceeds 10% of your adjusted gross income, but the balance is still deductible.
Since these areas are government-declared disaster areas, the loss can be claimed either on your tax return for 2017, or you can file an amended return for 2016 and claim the loss for that year. The purpose of allowing taxpayers to claim the loss on their 2016 return is to produce a (relatively) immediate refund which will get money into their hands more quickly than waiting for the 2017 return to be filed.
If you have experienced a substantial loss due to either Hurricane Irma or Hurricane Harvey, substantial tax benefits are potentially available to you. Below is a list of the counties in Florida and Texas, as well as the islands in the USVI, which are eligible for disaster-related tax benefits.
Aransas, Austin, Bastrop, Bee, Bexar, Brazoria, Calhoun, Chambers, Colorado, DeWitt, Fayette, Ft. Bend, Galveston, Goliad, Gonzales, Hardin, Harris, Jackson, Jasper, Jefferson, Karnes, Kleberg, Lavaca, Lee, Liberty, Matagorda, Montgomery, Newton, Nueces, Orange, Sabine, San Jacinto, San Patricio, Refugio, Victoria, Waller, and Wharton.
Brevard, Broward, Charlotte, Citrus, Clay, Collier, DeSoto, Duval, Flagler, Glades, Hardee, Hendry, Hernando, Highlands, Hillsborough, Indian River, Lake, Lee, Manatee, Marion, Martin, Miami-Dade, Monroe, Okeechobee, Orange, Osceola, Palm Beach, Pasco, Pinellas, Polk, Putnam, Sarasota, Seminole, St. Johns, St. Lucie, Sumter, Volusia
U.S. Virgin Islands:
St. Thomas, St. John
If you or someone you know has experienced a significant financial loss due to the recent hurricanes, please don’t hesitate to CONTACT US right away to find out what tax breaks may be available. We’re here to help!